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Charles Goldman to leave Fidelity

Overseer of Fidelity's RIA custody, broker clearing and family office units sets a departure date

Tuesday, January 26, 2010 – 11:21 PM by Brooke Southall
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Charles Goldman aggressively tackled Fidelity's approach to service but he may also have ruffled feathers

After a few weeks of rumors and buzz, Fidelity Investments confirmed that Charles Goldman is leaving the company.

The head of institutional platforms will leave the Boston-based giant at the end of March, according to its spokesman, Vin Loporchio.

Fidelity’s Mike Clark hired him in November of 2008 and he came aboard the company in December. The hire occurred only days after Goldman parted ways with Schwab Advisor Services, where he headed the unit under the title of executive vice president.

No replacement was named but, effective immediately, Sanjiv Mirchandani, president of National Financial Services, Mike Durbin, president of Fidelity Institutional Services, and Ed Orazem, president of Fidelity Family Office Services, will report directly to Gerard McGraw, president of the firm’s institutional products group.

Gerard McGraw

McGraw replaced Clark in September.

Goldman is leaving to pursue other opportunities, according to Loporchio.

“We remain fully committed to RIAs,” he says. “We expect to continue to grow and increase market share.”

Fidelity Institutional now has $396 billion of assets in custody, up 35% from 2008 and 200% from 2005, Loporchio says. It also snagged 191 breakaways in 2009, up 63% from 2008.

In addition, National Financial ended the year with $550 billion in assets – a $44 billion increase over 2008. It also added 14 new clients to its platform and renewed relationships with another 55 existing clients. Fidelity Family Office Services surpassed 100 family office clients.

Working to overhaul

In media interviews during his tenure at Fidelity Goldman emphasized that he was working to overhaul his new company’s servicing of RIAs — an area where the company has trailed its chief rival, Schwab. Goldman worked for Schwab from 2001 to 2008.

Service levels made substantial gains under Goldman, according to some of the 140 RIAs in Fidelity’s pilot program that launched in September,

The new service program emphasized a team structure and designated contacts. Goldman said he would roll it out to all Fidelity RIAs eventually. See Goldman aims to make red carpet service for RIAs universal at Fidelity Investments

But Goldman’s bid to bring about so much change in short order at Fidelity may have also ruffled some feathers, including those of Edward “Ned” Johnson III, chairman and CEO of Fidelity, according to a former Fidelity employee.

Feisty executive

Goldman is known as a feisty executive who will speak his mind when he believes in something. Early in his career he assisted clients in strategic development, operational improvement and organizational design at the Los Angeles office of The Boston Consulting Group. People who know him say that the intellectual and energetic approach that consultants employ remains part of his DNA.

These qualities make Goldman likely to land on his feet, according to Charles “Chip” Roame, managing principal of Tiburon Strategic Advisors.

“Charles Goldman is a great strategist and entrepreneur, all rolled up in one,” he says. “He’ll likely start a successful firm in some surprising business or maybe go back into consulting.”

Sources close to Fidelity say that he will be missed by many members of its institutional sales force. What sells, they say, in the custodial world is service and Goldman’s presence made Fidelity’s emergence in that area credible. He enjoyed a solid reputation at Schwab for making its service run smoothly, according to some RIAs.

Fidelity salespeople also found that Goldman himself was a selling point with many Schwab RIAs who had been sorry to see him go from their custodian. These RIAs liked him personally and described him as a straight shooter, according to a former Fidelity employee.

Another potential drawback to Goldman’s departure for Fidelity, recruiters say, is that sales forces at rival custodians will use it as a wedge.

“If you’re at Pershing or Schwab, you cross-sell against that — saying that Fidelity isn’t committed to the space,” says one recruiter who asked to remain anonymous because he works closely with the company.

What may have worked against Goldman staying in his post longer-term was that — in a sense — he and his boss, McGraw, had largely the same job, the source adds.

Indeed, as mentioned, McGraw has taken over his duties.

This is a structure has its advantages, according to Douglas Dannemiller, senior analyst with the Aite Group of Boston.

“This move conveys trust in the individual leadership of these business units, and transforms the organizational structure to a more traditional one,” he writes in research note. Dannemiller spent a decade at Fidelity Investments in various roles, most recently as a vice president with Fidelity Investments, National Financial.

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